Consumers love to receive credit card rewards from their spending. So long as cardholders pay their balances in full and on time, these benefits come at no cost to themselves. At the same time, a different situation exists for merchants who accept credit cards. They must pay merchant fees that typically consume 3-5% of the amount of each transaction made with a credit card. For a long time, these businesses have been trying to have the government regulate merchant fees. If they are successful, it will likely mean the end of reward credit cards as we know them.

To understand why a reduction of credit card merchant fees will undermine cardholder rewards, it helps to understand how banks are able to offer these rewards in the first place. When a cardholder carries a balance on his or her credit card, the bank makes a sufficient profit from the interest paid in order to offer a fraction of that amount as a reward. For those customers who pay their balance in full every month, the banks are essentially offering an interest free loan. The only way that they can lend these cardholders money, let alone offer rewards, is by receiving swipe fees which are paid by the merchants. If merchants achieve their goal of having legislation passed to slash merchant fees, the credit card issuers will have little, if any money to pay their customers rewards in the form of cash back, loyalty points, or frequent flier miles. (more…)

There are a seemingly infinite number of credit card offers on the market, with each offering a unique set of benefits and drawbacks. For some, it may be tempting to apply for every new card with the hopes of realizing discounts, sign up bonuses, or promotional interest rates. Others are skeptical of these opportunities, as they are duly concerned about the effect of new credit card applications on their credit score.

How A New Credit Card Application Impacts People’s Credit Scores

When someone applies for a credit card, the first thing that happens is that the bank makes an inquiry to one of the credit bureaus. This process retrieves the applicant’s credit history while adding a record of a new application for credit. By itself, a single additional inquiry is insignificant, yet multiple applications for new credit within a short period can have a negative impact on one’s credit score. New applications only impact the ten percent of the score that relates to recent inquiries.  Therefore, the effect is minor and is only apparent in the short term, often as little as 90 days. Many people with credit card debt avoid taking advantage of 0% APR credit card offers due to credit score fears, but for people with high interest debt, the question should be how much are a few credit score points worth. (more…)

While many rewards credit cards are tied to an affiliate’s loyalty program, some banks offer their own proprietary points system for use with their credit cards. Integral to these points programs are a means to redeem the currency for products and services. These programs can also allow customers to make purchases at select merchants in order to earn additional rewards. Chase’s Ultimate Rewards mall allows customers to redeem points earned and to earn bonus points for making purchases at featured retailers.

How The Ultimate Rewards Mall Works

Chase’s best credit card offers fall into three different card families that are eligible to participate in their Ultimate Rewards program, their Freedom cash back credit card, Sapphire, and Ink offers which that already earn Ultimate Rewards points from their purchases. When it comes time to redeem these points, cardholders can visit the online shopping portal to redeem points for travel, cash back, experiences, merchandise, and gift cards. Points are generally worth one cent each with most redemption opportunities, but cardholders will receive a 25% bonus when making travel reservations through the Ultimate Rewards web site. (more…)

Everybody knows that you can use your cash back rewards card to save money on your everyday purchases. Indeed, banks compete fiercely with each other in order to offer customers the best cash back return rates, with their best offers only being separated by fractions of a percentage point. At the same time, most card issuers offer their customers and online shopping “mall” that will return far higher rates of cash back on purchases from specific merchants. Discover offers its ShopDiscover online shopping rewards portal that will return a 5% to 20% cash back bonus on each purchase.

How ShopDiscover Works

The shopping portal is available to all Discover customers that hold one of their cash back reward cards. Cash back card holders are eligible for 5% to 20% cash back, depending on the merchant; however miles cards members will only receive double miles. Cardholders will first need to log in to their account with their normal user ID and password. From there, they can choose to shop at over 200 different merchants. 

Each merchant is listed with offer details which specify the rate of cash back and any other benefits and limitations. In addition to bonus cash back, some merchants even offer free shipping for purchases above a specified spending minimum.  Limitations can exclude charges for tax, shipping, service fees, and gift cards.

Fortunately, all offers are in addition to the normal cash back or miles received for spending on the card member’s Discover cash back rewards card. Cash back bonuses will be credited to the cardholder’s account within eight weeks of purchase; however, in the case of hotel stays and cruises, the bonus will take eight weeks from the date of use.

What Types Of Retailers Are Listed

While there are many smaller retailers featured in their online shopping mall, there are also some major outlets including department stores, home improvement stores, office supply chains. For example, purchases at JC Penny are eligible for 10% cash back, 5% cash back at the Home Depot, and 5% at Office Depot. Finally, there are numerous specialty retailers in the areas of apparel, travel, sporting goods, electronics, and gifts. In particular, Barnes and Noble and Nike both offer a 15% bonus.

Who Can Benefit From Using ShopDiscover

Discover customers with a reward card would be wise to familiarize themselves with the list of merchants in the ShopDiscover mall. Online shopping has always held an advantage in convenience while usually saving customers the cost of sales tax. While the savings offered to Discover’s cash back card holders can be very significant, the double miles offered to miles card holders is far less so. By adding an additional bonus for online shopping at popular merchants to cardholder’s existing cash back benefits, ShopDiscover is a valuable asset to their customers.

Frequent flier miles and other loyalty points will always be devalued over time, but cash back is the ultimate credit card reward. Like most other banks, Citi offers a variety of cards that return different levels of cash back based on various merchant categories.  Beyond the standard cash back returned, Citi offers additional rewards for purchases made with merchants in their Citi Bonus Cash Center.

How This Program Works

There are four Citi cash back credit cards that are eligible to participate in the Citi Bonus Cash Center; Citi Dividend World MasterCard – their best credit card offer for rewards – ,  the AT&T Universal Savings Platinum Card, and both the Citi Dividend Platinum Select Visa and MasterCard for College Students. Cardholders must then log into their Citi credit card account online before visiting the Citi Cash Bonus Center. There, card holders can link to hundreds of popular merchants. While each individual online store offers a different percentage of cash back, the average is 5%. Once a purchase is made, the cash back earned will be visible online within 45 days, however it will take one to three statement cycles before that amount is credited to your account. The bonus cash back earned is in addition to the cash back rewards normally earned from purchases. (more…)